BP warns oil disaster costs have hit $6bn

City A.M. Reporter
BP’s estimate of its costs for the Gulf of Mexico oil spill have spiralled by more than $2bn over the past three weeks to $6.1bn (£3.8bn), the company said yesterday.

The costs include the $319m BP has already paid out in compensation to businesses and individuals affected by the 20 April disaster. In its last estimate on 19 July, BP said the costs had reached $3.95bn.

BP also yesterday confirmed it had made an initial deposit of $3bn into a $20bn escrow fund set up for the spill.

Yesterday, BP was closing in to start a permanent kill of the blown-out Gulf of Mexico oil well this week, unless an approaching weather system disrupts the timing, the top US oil spill response chief said.

“They are closing in on the last 30-40 feet... It’s ongoing and going in segments,” retired Coast Guard Admiral Thad Allen told a conference call to update on the final stages of definitively plugging the world’s worst offshore oil spill.

“We expect that sometime before the end of the week we will be able to intercept the annulus (space between the well shaft and surrounding rock) and commence the kill,” Allen added.

He said the spill response authorities were closely watching a tropical weather system moving east over the Florida peninsula, which forecasters see crossing in a few days near BP’s Deepwater Horizon spill site.

Allen said that depending on its strength and direction this system could affect the timing of the relief well “bottom kill” operation to permanently shut down the crippled Macondo well, which was provisionally capped on 15 July.

Forecasters were giving this weather disturbance a low 20 per cent chance of strengthening into a tropical depression. As the deepwater engineering operation advanced, BP said it was also moving to fulfill its public commitments to compensate for economic damage caused by the spill, which has hit marshes, fisheries and tourist beaches along the Gulf Coast.